After reaching a record high of $108,000, Bitcoin's price has sharply declined, causing investors to question the reasons behind this sudden drop. While the previous price surge had generated excitement in the market, several factors are currently contributing to the downward trend. Meanwhile, if Bitcoin fails to break through the resistance level, the price may drop to $95,000.

Fed Interest Rate Decision

A major reason for Bitcoin's decline is the upcoming interest rate decision by the Federal Reserve. However, Coinpedia reports that there is a 96% chance that the Fed is expected to lower rates by 25 basis points, but there are still concerns about how the Fed will handle inflation in the future.

With inflation rising to 2.8% in November, Fed Chairman Jerome Powell's comments on the interest rate outlook for 2025 are being closely scrutinized. If the Fed cuts rates lower than expected in 2025, this could put additional significant pressure on the market.

Traders Taking Their Profits

Another important factor is the selling wave from short-term Bitcoin holders. Many traders who bought Bitcoin recently are now selling to secure profits after the significant price increase. This type of selling typically occurs after the price reaches a new high.

However, long-term holders, who bought in when Bitcoin was trading between $90,000 and $100,000, largely remain passive, possibly waiting for more stable conditions before making any moves.

History Shows That Corrections Are Normal

Bitcoin's past price cycles show that corrections are a normal part of its growth process. In previous all-time highs, Bitcoin often experienced pullbacks of up to 34%. These short-term declines can wipe out many weeks of gains but are considered a natural part of market behavior.

Analysts believe that this correction may temporarily push Bitcoin's price below $100,000 before stabilizing again.

Bitcoin Will Drop to $95,000

As of now, Bitcoin is trading around $104,000, marking a decrease of 2.93% in the last 24 hours. However, for Bitcoin to maintain its upward momentum, it needs to turn this new peak price into solid support. If successful, it could push the price past the long-awaited $110,000 mark.

However, if Bitcoin cannot break and hold above this resistance level, the price may decrease and Bitcoin could retreat to the next important support level of $95,651.

DYOR! #Write2Win #Write&Earn $BTC